ANAMBRA: Managing N127b Inherited Debt By Ifeanyichukwu Afuba

In my feature on the liabilities component of the handover terms by the Peter Obi administration to the Willie Obiano government widely published in the last week of April 2020, l erroneously put the debt figure at N109b.

Further research has shown that the debt inherited by the Obiano administration was higher by N18b. No less authority than Governor Willie Obiano himself confirmed that the present government was encumbered with N127b debt portfolio by the Peter Obi administration.
Daily Sun of 18 October 2017 in the story “l inherited N127b debt from Obi” reported the Governor as saying that he had earlier kept silent on the matter in order not to be distracted so early in the life of the present government.

Chief Obiano made clear that the “former governor hurriedly awarded contracts at the dying minutes of his regime without making any provision whatsoever for them in order to create problems for his administration.”

Given the huge implications of the above debt profile for development, it becomes imperative to see how Anambra State has fared in this condition with a view to distilling lessons for good governance. With an average monthly receipt of N2b from the Federation Account, we find that it would take Anambra State six and half years of its entire national receipt to offset this stupendous debit – leaving nothing for other services. Anambra’s public estate hovered on the brink of collapse.

Good leadership saved the situation. Governor Willie Obiano made the first gains by implementing the continuity principle. An appreciable number of appointees in the past administration were retained in the new government. This had the benefit of saving cost in refresher training and orientation. It ensured better and quicker grasp of the handover notes, thus saving time and need for consultancies.

The Obiano administration took a conscious decision to follow up on uncompleted projects initiated by the preceding government even though many of them were not priority ventures.

Politically, this was somewhat suicidal as at best the credit would be shared with the past government. But it was statesmanship by Obiano to place the public interest first. Mobilisation fees had been paid out on these transition phase contracts by the Peter Obi administration and this money would be lost if the contracts were terminated.

The State was likely to incur further sanctions for contract terms violation in the event of litigation. And given the inflationary pressures on Nigeria’s economy, a return to the projects in future would be at much higher cost. In the face of the State’s cash crunch, gradual execution of the inherited projects proved to be the best option.

Early in the life of the administration, Governor Willie Obiano introduced the concept of “doing more with less.” It was both a policy statement and affirmation of the will to succeed. He had taken stock of the grim reality on ground and like a good commander was telling his troops our only passage home is by defeating this army before us. “Doing more with less” is perhaps best exemplified in the Anambra Road Maintenance Agency whose laudable operation reduced the incidence of new road contracts.

As an auditor of repute, no one needed to remind Obiano on prudent management of the State’s limited resources. Areas of waste and leakage were significantly reduced. With the application of fiscal transparency, monitoring and control mechanisms, a healthy public finance system thrived. This earned Anambra State lead position in International Public Accounting System (IPSAS) 2015 survey on states accountability.
With demonstrable steps of competence and accountability, Obiano easily won investors’ confidence.

There is wide agreement that Anambra is among the top.three states in investor fund influx in the past six years. This greatly helped Anambra survive the crippling effects of the N127b debt of the Peter Obi era.

Shoring up the State’s internally generated revenue gave the state government another window of air in the face of the choking N127b liability. From an average of N500m monthly net in 2014, the local earning is now about N2b. Efforts toward striking N3b monthly internal income are continuing.
Obiano deserves applause for a huge rescue job.

Afuba is editor of Anambra Times And A Guest Writer To EkoHotblog